Bank of Korea lifts growth outlook as September exports hit record

The Bank of Korea said Thursday that South Korea's economic growth this year and next will substantially exceed its August forecasts, as a semiconductor-led export boom pushes trade to records and keeps the central bank on a path of further rate increases.

In its October economic assessment, the bank said gross domestic product will outpace its August projections of 3.3 percent for this year and 2.9 percent for 2027 by a considerable margin, without giving revised figures.

The revision rests on exports. "In particular, September exports exceeded $120 billion to set an all-time high, as IT items continued triple-digit growth from a year earlier and the increase in non-IT items also expanded," Bank of Korea Gov. Shin Hyun-song said.

Third-quarter growth stayed high, extending the first half's pace, as export and investment strength centered on the IT sector outweighed renewed Middle East tensions, the bank said. For the full year, it expects customs-cleared exports to surpass $1 trillion and the current account surplus to exceed $45 billion.

Consumer inflation and core inflation this year should be broadly in line with the August forecasts of 2.7 percent and 2.5 percent respectively, but next year both are expected to exceed the earlier projections of 2.3 percent for headline inflation and 2.5 percent for the core measure.

On semiconductors, Shin said spot prices for DRAM have climbed from about $45 in early summer with no sign of easing, and that chip prices are holding firm. He said two preemptive rate increases in July and August had secured policy room, and that the timing and pace of any further increase will be decided by the data.